Sensex tops 12-k mark as global markets rally

Written by Markets Bureau | Mumbai | Updated: May 5 2009, 06:49am hrs
The rally in emerging markets, especially Russia and China, last week was reflected in Indian markets on Monday, which reopened after a four-day recess. Equity markets jumped to their highest level since October 2008.

The 30-share Sensex of the Bombay Stock Exchange (BSE) topped the psychological 12,000-level to end the trading session at 12,134.75 points, gaining 731.50 points or 6.41%. The Sensex was the highest gainer among all Asian markets. Similarly, the broader S&P CNX Nifty of the National Stock Exchange (NSE) surged by 180.05 points, or 5.18%, to close the day at 3,654 points.

The rally was part of the extended gains witnessed in Asian markets, which moved up in response to data released by China revealing its industrial output had expanded for the first time in nine months. Late night trends showed the recovery persisting, with US equity markets also rising in early trades.

Leading indicators of Indias industrial output indicate that a recovery could be around the corner. An ABN Amro bank purchasing managers index-based survey of 500 companies rose to 53.3 in April from 49.5 in March, pointing to increased activity in the domestic manufacturing sector.

Te latest macroeconomic data showed an improvement in manufacturing activity in the US and Europe, too. The Eurozone manufacturing purchasing managers index came in at 36.8 in April, above 33.9 in March. The widely tracked ISM purchasing managers index in the US rose to 40.1% in April from 36.3% in March, its highest gain since September 2008.

Bolstered by strong global and domestic macroeconomic data, key equity indices across the Asia-Pacific region rallied higher on Monday to their seven-month closing high. Key benchmark indices in China, Hong Kong, Singapore, Taiwan, and South Korea gained by between 2.09% and 5.82%.

Overall, the macroeconomic numbers coming in are very encouraging and more positive than they were earlier. So, there has been a clear recovery in investors risk appetite resulting in increased fund allocation for emerging market equities. Funds that have been sitting on the sidelines have now started coming in, said Mirae Asset Global chief executive Arindam Ghosh.

Echoeing a similar view, Birla Sun Life mutual fund co-head of equity investments Ajay Argal said, The rate of fall of key economic variables has certainly eased in recent times. The latest macroeconomic and corporate earnings results have been better than market expectations, giving hope of a recovery among global investors.

According to provisional data released by BSE, foreign institutional investors were net buyers of equity worthy Rs 1,417 crore on Monday while domestic institutional investors turned net sellers to the tune of Rs 92.60 crore. Since March 9, 2009, FIIs have bought domestic equity worth Rs 9,840.60 crore.

Market breadth, indicating the overall health of the market, remained positive throughout the trading session with 1,771 stocks in the BSE gaining ground, compared with 770 stocks that declined.